How Often Should You Review Your Household Budget Sheet?

You’ve been using a household budget sheet for a while and perhaps it needs a good review.  You may find it’s equally as difficult to find the motivation to review your budget as it is to create it and begin spending according to your plan.  Well, that’s life and we’re all human.  But, reviewing your budget is important and you don’t want your efforts to be wasted.  Otherwise, what was the point to begin with, right?

Why review your budget?

Life changes and so do expenses

First, life has many seasons and so will your personal budget.  One of the biggest examples I can recall is having children.  Your budget will definitely change when you start a family.  Or, maybe you were single and living on a budget.  Then, you met the one and he or she changes everything!  Everything includes your budget (now it belongs to both of you).

Expenses change from month to month

There is not doubt that certain months out of the year create new expenses.  Your expenses from Thanksgiving to Christmas will certainly be different than your expenses from July thru September.  Or, beyond the calendar, let’s say your family decides to come see you for the weekend.  Will you not need more food in the house and cash for entertaining?  Yes, your budget for that particular month will change.

To make sure your budget is still accurate

You may have a budget, but how do you know if it’s really accurate.   You worked hard to estimate your budget when it was first created.  But, have you been tracking expenses.  Sure you have!  So, you need to review those expenses, compare them to your budget and adjust where necessary.

Perhaps gas prices have risen.  You spent $200 per month for the last 2 months on gas, but your budget only had $150 planned for gas.  Did you use a credit card to make up the difference, or rob from your grandmother’s birthday fund?  Either way, you need to know where that $50 is going to come from.

How often should you review your budget?

Are you convinced you need to review your budget?  I’ll assume the answer is yes.   So, you’re on board; let’s do this thing.  You ask – How often should I review my budget?

Dave Ramsey recommends creating  a zero-based budget each month.  The recommendation is to find a purpose for every dollar at the beginning of the month.

I like this approach.  I mean…I love this approach because planning each month keeps you on top of things.  Since I started reviewing and adjusting my budget (giving each dollar a purpose) at the beginning of the month with my wife; we have found we are on top of unexpected expenses.  We’re on the same page and we know what money is going where before the month begins.

As an aside, I think it’s pointless to review your budget more often than once per month and dangerously approaching money management neglect if you let it slide two months.

How should you review your budget?

Personally, we don’t wipe out every dollar and start from ground zero.  We keep our existing budget in-place and make a copy of it for the next month.  Follow along with me…

First, grab a legal pad and start writing down some of the more random/unplanned type expenses you think you’re going to encounter during the upcoming month.  All of these go on the list and get an estimated amount assigned to them.  Some things will have been covered with our existing budget and some things are not covered.

Once you have the list discuss or review priorities.  Decide which expenses are the most important.  These expenses need to be covered for the existing month.  Some expenses you can pause and review the next month.

Most of the time my wife and I can quickly agree on priorities.  We might also have a discussion over an expense that could be considered for the emergency fund, but most of the time we’ve had this discussion as the need surfaced.  But still, something could have lingered for a bit and we need to raise it for discussion again.  A good example might be a problem with the washer and dryer ignored too long.

Now, you have your list, costs and priorities.  It’s decision time!  What can you cover and what is going to roll to the next month.  You only have so much money and can only reallocate so much money from certain categories to cover expenses.

Much of the time our conversation is around miscellaneous expenses that occur every few months or once per year.  We do have a certain amount of money we budget to cover such items.  Generally it will cover the most important items, but we do roll many expenses to the next month.

Final thoughts

This approach makes you work hard to use the money you have available.  As a rule, there are certain things we can’t take money from to cover expenses up for discussion.  These sources include money for emergency savings (unless it’s an emergency), God’s money (tithing), bills and groceries.  After that, we’ll move money around as needed.

So, it might sound like a lot of work, but it’s not.  It’s worth it.  The more work, communication (if a couple), and thoughtfulness you put into your budget, the more freedom you’ll get out of it!

How often do you think you should review your budget?

Photo by Mr.Thomas